Financial guidance for US college students

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         A current crisis US college students are facing is they are becoming financial debt. Today, the “student debt in America now totals $1.2 trillion” (The Economist) dollars. The growth of students getting into financial debt has grown tremendously in the last decade. We will discuss information about how a US college student goes into debt and how to avoid. You will learn about the following topics: 1) money mistakes, 2) survey on college students, and 3) recommendations. As a student entering into the next step in education; are you ready to face financial decisions that can affect you for the better or worse? Hopefully, somewhere you have received knowledge before entering college in how you should manage your money correctly. We hear reasons why college students struggle financially when they are in college even after post college life they continue to struggle. As students leave to college and become independent for themselves; they do not make the correct financial decisions.

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         College life is a time to be independent for yourself, a time to figure out what you want to do as in a career, and who you want to become. However, there are challenges that you will face. Some of these challenges you will face now but can last for most of your lives. One of the factor is how you manage your money. In the article “6 Common Mistakes College Freshmen Make” by Amanda Reaume. She explains, mistakes college freshmen students make when they are independently on their own with their money. Here are three of the six mistakes that college freshmen face when it comes to finance: 1) “not creating a reasonable budget”, 2) “charging credit cards like it’s free” 3) “peer pressure.”

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         The first point that Amanda Reaume states in her article about the financial mistakes that college freshmen make is they do not create a reasonable budget. As a new college student that is entering into your first semester, you have to watch out on how you spend money. Students that don’t create a “budget are at risk of running out of money before the end of the year, or even before the end of the first term.” This can cause the student to delay their educational pursuits and/or lose their desire to continue their education. We know some individuals who have struggle with keeping a budget. Friends who will rather go out and enjoy with others in an activity that cost, buy items that they truly know they can’t afford, or other reasons. We know friends that have had to delay their education, as well. It is all because they did not know how to budget their money.

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         The second point, is that students with a starter credit card charge item like it’s free money.  When students are independent in their spending and carry a credit card, they feel that they can buy any item or go do an activity not matter the cost. Although, having a credit card will help build your credit score; those who don’t take control of their credit card spending “can quickly spiral out of control for a cash-strapped student.”  Students with credit cards have to view a credit card as not free money. Have the student take control of the credit card and not have the credit card take control of student. Also, taking out loans and the amount you take out will affect your credit score if you do not pay the amount at the time you have agree on in paying the loan off.

            In the figure below you can visualize the increase of student loans taking out from the year 2004 to 2014. The graph indicates that the number of loans taking for college students dramatically increase in 10 years.

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         The last point is that students are being peer pressure. As students, live on their own and without supervision from their parents; “some students get into trouble trying to keep up with their peers who either have more money or aren’t financially savvy.” Peer pressure is a big factor on how students can lose their money quickly. There will be times where you will have to make decisions on where you and your peers should go for activities that is within your budget.  Also, a time you will have to disagree in some of the activities that your peers choose but in order to all agree look for activates that are low-cost.

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        In a few articles that we have read about the reason why students get into debt. A few visuals are included to support the reason of students getting into debt. In each of those visuals they indicate what cause students to be less responsible in managing their money.

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The graph here below shows a decline of how 4-year college students being less responsible in managing their money from the years 2012 to 2014. The reason behind that is that students are not educated of how they should use spend their money.

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 In the figure below shows where in the United States High School students are educated on how they should manage their money. Not even half the United States are not educating high school students about how they should manage their money.

 

 

 

 

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We will now share with you 10 Money management tips that was posted by Lauren Erick in a blog post in Rasmussen College website.

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1. Budget for everything

When it say that you should budget everything it literally means that you need to budget everything. Budgeting will not only help you track your spending but should help you in save money for every month. “Which is key.”

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2.Purchase used school books & sell old ones

Text books can be expensive depending on where you buy them. It is best to not get your books at the local bookstore of your college because of the high cost of your textbook. Try to buy your books at Amazon.com or other alternatives such as asking friends or post on social media of what you need. Whatever you can find.

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3.Automate your savings

We all know that the exciting part of having a job is pay day. Okay, that might not be entirely true but once that day comes make sure you put a “bit of your money into your saving account.”

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4.Get creative and find fun for free

College students look forward to the weekend and being free of school and work but that can affect your financial depending on the activities. Look for activities that won’t cost you a penny out of your pocket.

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5.Steer clear of automated payments

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6.Cook at home

Now… that doesn’t mean that you can’t go out to eat. There are times where you will have to reward yourself of an accomplishment you did for a class by going out. The part where it becomes a habit is what you should watch out.

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7.Earn some extra cash

There are multiple ways that you can earn a little cash in your pocket. Remember the key word is to “earn” not to “ask” for money. Getting a part-time job can help in paying bills, school, and other items.

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8.Pay in cash

Paying cash will be easier than using a credit card. It will help budget your money. “Once the cash is gone, it’s gone!”

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9.Use online coupons

Buying items online is much different than going to purchase an item in-store. You can find great deals on items online.

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10. Beware of the “it’s only 5 bucks!” syndrome

Although an item can just only cost 5 bucks or less if it continues to become a habit that 5 bucks or less can turn into $30 a month that is taken out of your money.

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            In conclusion, we see what is the main reason why students are falling into debt is because they are not educated enough in how they should manage their money. Hopefully, this report will help you to learn what you can do before entering into college, that you will take the time to learn what common mistakes college students are making when it comes to managing your money and how you can avoid being financially in debt.

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Work Cited

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DeRuy, Emily. "We don't teach students financial literacy - and that's a big problem." Fusion. N.p., n.d. Web. 01 Feb. 2017.

 

Elrick, Lauren. "Rasmussen College." Rasmussen College - Regionally Accredited College Online and on Campus. N.p., n.d. Web. 08 Feb. 2017.

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 "More is less." The Economist. The Economist Newspaper, 13 Aug. 2015. Web. 01 Feb. 2017.

 

"Journal of Student Financial Aid." "The Effect of Educational Debt on Career Choice" by Yeseul Choi. N.p., n.d. Web. 01 Feb. 2017.

 

"6 Common Money Mistakes College Freshmen Make." Time. Time, n.d. Web. 01 Feb. 2017.